1 Executive Benefits

2 Why invest your time ? Revenue Growth from within……….. Assumptions: Produce 50K of premium year 1, then increase production each year by 10K for 10 years (ie.. 50K, 60K, 70K). Year 1: First Year Revenue = 30K Year 5: Total Revenue = 95K (37K in recurring revenue stream) ($370,000 YTD) Year 10: Total Revenue = 177K (88k in recurring revenue stream) ($1,022,000 YTD) Win Win Win ER – EE - Broker

3 Objective Utilize group and individual product platforms to create a more effective integrated disability program Integrated Group and Individual Disability Coverage Group Long Term Disability Economies of Scale ER owned Designed for masses Variable rate structure Individual Disability Income (IDI) Individually owned ER sponsored Value added, customized Pooled, level-rate structure

4 Integrated disability strategies SHORTFALLS & GAPS (Exposing the need) -Benefit maximums -Uncovered earnings -Taxability of benefits VALUE ADDED (Executive Benefit Program enhancements) - Contractual features - Customization RISK TRANSFER (risk diversification) - Reduced exposure / pooling All size cases Larger cases - medium to high credibility All size cases

5 Concern: Income replacement shortfall due to benefit maximum Shortfall & gap illustrated Assume 60% to 10K LTD plan LTD Plan Max 10K

6 Shortfall & gap illustrated Assume 60% to 10K LTD plan *Tax assumption - 28% Above chart is displayed graphically on next slide The yellow “Total Income Replacement After Tax” column represents the NET after-tax income replacement.

7 Assumptions: Non-contributory 60% to $10K group, net = 28% tax implications Shortfall & gap illustrated “The tax bite” Net group LTD Gross group LTD 0% 20% 40% 60% 80% 100% $100,000$150,000$200,000$250,000$300,000$350,000

8 Salary Incentive compensation Deferred comp Stock options 401(k) Pensions Total compensation Uncovered earnings GLTD Potential coverage GAP (income not insured)

9 Group LTD Supplemental IDI 0% 20% 40% 60% 80% 100% $100,000$150,000$200,000$250,000$300,000$350,000 Annual earnings Income replacement Assumptions: Non-contributory 60% to $10K group LTD, net = 28% tax implications IDI = 60% minus group LTD Back to gross replacement goal (Salary or total comp) The supplemental integrated solution before-tax view

10 Assumptions: Non-contributory 60% to $10K Group LTD, net = 28% tax implications IDI = 75% minus group LTD Enhanced income replacement to offset tax implications (Salary or total comp) The supplemental integrated solution before-tax view Group LTD Supplemental IDI 0% 20% 40% 60% 80% 100% $100,000$150,000$200,000$250,000$300,000$350,000 Annual earnings Income replacement

11 Integrated risk management Transfer of risk:Individual experience does not impact group rating Rate stability:Individual rates are fixed to age 65 and cannot increase Value added :Additional features generate executive benefit perk Senior Managers Employees Managers Executives Fixed pool rated IDI & Variable experience rated Group LTD Variable experience rated Group LTD Carve out group Carving out a portion of high earning employees’ LTD benefit can reduce volatility in the Group LTD plan by shifting a portion of the benefit into a pooled rate individual platform.

12 Large number of ages and incomes in narrow range equals predictability Small number of high earners can increase volatility in costs in any one year. Risk management Age and income distribution review (Assume 60% to $10K LTD plan) Concerns: Volatility Year-to-year fluctuations Reserves impacting experience rates LTD Plan Max

13 Value added features in the IDI offering Cannot be cancelled and contract cannot be changed Level non-Cancellable contract premiums, up to age 65 Individual ownership of policies (Portable) No offsets with WC or SS or other government programs Large case multi-life discounted rate structure Recovery provision Long term care exchange installs an asset protection feature into plan Catastrophic disability benefit for more severe disabilities (optional)

14 The value-added integrated solution: Enhanced features Assumptions:Non-contributory 60% to $10K group, net = 28% tax implications IDI: 75% - Group LTD, Cat = 25% Lifetime Continuation: Asset protection (long term care exchange) Group LTD Supplemental IDI Catastrophic Disability Benefit 0% 20% 40% 60% 80% 100% $100,000$150,000$200,000$250,000$300,000$350,000 Annual earnings Income replacement

15 What’s the bottom line? Integrating group and individual product platforms can create a more effective disability program for your clients and their employees. Integrated Group and Individual Disability Coverage Group LTDIDI

16 When would we recommend integrating group and individual? “High risk” group LTD plans  Maximums over 10K / > 60% income replacements Large income replacement shortfall Risk tolerance: Customer would like more certainty vs. variability  Large claim exposure  Preventive large claim protection / Have not had a large claim yet Installing a value-added benefit is of interest to a particular group of EE’s / Executives Longer term relationship and solution is desired Unum will present an alternate integrated Group and IDI solution when plan review reveals:

17 IDI case study The Situation/Challenge Less than favorable disability income replacement for large executive population The Solution Decision made to offer IDI to executives –Increased benefit maximum by 33% –Result was $10k monthly disability benefit on guarantee issue basis –Provided more robust income replacement that covered bonus compensation through fully portable IDI coverage at a 30% discount –Achieved 40% participation in the new IDI plan and generated $750k+ IDI premium Case at a glance Information services company 1,500 highly compensated executives across the country “Risk transfer”–integrated LTD and IDI on executive class to off load some of the experienced rated LTD risk Solved the income replacement need for executives

18 The Situation/Challenge Less than favorable disability income replacement for large executive population The Solution Offered additional IDI on GSI/GTI basis along with catastrophic benefit for key executives –Provided up to 100% income replacement for certain executives –Increased the benefit max to $25k ($35k with catastrophic) –Generated $2,700/month at maximum compensation rates –Option to offer voluntary IDI to others in company Case at a glance Small financial company 14 highly compensated executives across the country Provided more robust income replacement through highly integrated offering IDI case study